Investment in Health, Healthtech and Pharmaceuticals in Latin America and the Caribbean
- Samuel Fernandez
- 2 days ago
- 6 min read
A Supplement for the Growth and Well-being of the Region
Healthcare, far from being a mere expense, is emerging as a strategic investment with a significant return on productivity and social well-being, which in turn drives economic growth. In Latin America and the Caribbean, this sector presents a vast horizon of investment opportunities, particularly in Panama, a logistics and trade hub with growing potential.
The report Health Innovation & Technology In America & The Caribbean, prepared and published by HolonIQ and IDB Lab, offers a detailed overview of health innovation and technology in Latin America and the Caribbean (LAC).
Key findings of the report include:
Challenges: The LAC region faces significant health challenges, such as limited access to quality services, high out-of-pocket costs, a growing burden of chronic diseases (such as obesity and non-communicable diseases), and mental health issues. Systemic challenges include fragmented health data, a lack of universal health coverage, and a shortage of personnel. Industry challenges include outdated equipment, variations in the quality of care, and an underdeveloped pharmaceutical market.
Opportunities: Despite the challenges, there is great potential for technological innovation to improve health and well-being in LAC, especially for vulnerable populations. The COVID-19 pandemic accelerated the adoption of digital health services and highlighted the importance of health for economic and social development.
Regional Overview: In the last decade, more than 1,200 healthcare innovation and technology companies have emerged in Latin America and the Caribbean (LAC), with Brazil hosting approximately half and attracting nearly half of the funding. The ecosystem focuses on prevention, treatment, and health systems, with growing activity in the healthcare finance sector.
Strategic Changes: The report identifies 15 strategic shifts shaping the future of healthcare, digital health, and biopharmaceuticals in Latin America and the Caribbean (LAC). These include a transition to value-based care, predictive healthcare, retail healthcare, and the fight against the global workforce shortage. In digital health, key shifts include telemedicine and telehealth, connected health, data and data analytics, patient engagement, and healthcare interoperability. In biopharmaceuticals, shifts include AI-powered drug discovery, decentralized clinical trials, biosimilars and generics, drug pricing, and personalized medicine.
Investment Trends: Since 2010, US$3.3 billion has been invested in health technology in Latin America and the Caribbean (LAC) across more than 1,400 funding rounds. While investment saw a significant increase during the pandemic, a sharp correction occurred in 2023. The market is still nascent, with few funds dedicated to health, and there are challenges in initial financing, regulatory environments, and achieving scale due to the fragmented economies of the health sector. Brazil and Mexico dominate venture capital investment in health technology in the region.
This article explores the transformative opportunities that position healthcare as a powerful engine of economic growth and social well-being, beyond being an essential service. We will address some of the systemic challenges, highlight strategic shifts, and analyze investment trends, revealing the dynamic innovation landscape in this sector. However, our main objective is to highlight Panama's growing importance as a strategic hub for investment in the healthcare, healthtech, and pharmaceutical industries.
Health as an Economic Engine
Between 2012 and 2017, private investment in the Latin American pharmaceutical industry nearly doubled, from $68 billion to $110 billion. This influx of private capital is also driving the development of new medical devices, treatments, and medications that are revolutionizing healthcare in Latin America.
According to other studies consulted, including a recent analysis by the University of Sao Paulo for FIFARMA, they show that adequate financing of health systems is an investment with high economic and social returns. A healthy population is more productive, which directly contributes to a country's Gross Domestic Product (GDP). Furthermore, greater well-being allows people to participate in recreational, educational, and social activities, improving their quality of life.
The Latin American and Caribbean region is experiencing an aging demographic trend, similar to Asia and Europe. It is estimated that by 2030, 15% of the Latin American population will be over 60 years old, and this figure is projected to increase to 20% by 2050. This change increases the need for medical care and, consequently, the associated costs. Given this scenario, it is imperative to increase and sustain investment in health, even during periods of low economic growth.
An Ecosystem for Investment: Keys and Opportunities
Investing in modern, accessible, and effective healthcare systems not only saves lives but also creates new, quality job opportunities and strengthens local economies. This approach to universal health coverage, which seeks to guarantee access to quality medical services without financial hardship, is critical to creating a healthcare ecosystem that boosts both well-being and employment.
Investment opportunities extend across the entire healthcare value chain, including:
Hospital Infrastructure and Primary Care Centers: The modernization and expansion of health facilities are crucial to improving the quality and coverage of care.
Health Technology (Healthtech): The development and implementation of technological solutions, such as telemedicine, electronic medical records, artificial intelligence for diagnostics, and health data management, are rapidly growing and in-demand areas.
Pharmaceutical Industry: The research, development, and production of medicines, vaccines, and medical devices are pillars for ensuring access to effective treatments. Innovation in this field is vital for addressing emerging and chronic diseases.
Support and Logistics Services: From the pharmaceutical supply chain to hospital waste management and laboratory services, there are multiple niches for investment.
Human Talent Training and Development: Investing in educational programs for healthcare professionals, technicians, and support staff is essential to sustaining the sector's growth.
Panama: A Strategic Center for Investment in Health
Panama's robust economy, a hallmark of the last decade, has led to substantial public investment in health services and pharmaceuticals, now surpassing $3 billion. The country is Central America's leading importer of pharmaceuticals and medicines, driven by strong local demand. The government is actively pursuing universal healthcare to broaden access for its citizens, 80% of whom reside in urban areas, simplifying service delivery. Panama's economy continues to exhibit consistent GDP growth, cementing its status as one of the region's most stable and strongest economies.
Panama is strategically positioned to become a pharmaceutical hub for the region, leveraging its ideal geographic location between North and South America. Its robust maritime connectivity via the Panama Canal and the significant Tocumen International Airport (the region's largest) enhance its appeal as a business destination. These factors, combined with attractive tax incentives, make Panama an excellent choice for companies looking to consolidate operations in Central America or expand across Latin America.
Panamanian laws, such as the Law No. 41 of 2007 (known as the Multinational Enterprise Headquarters Act) and its amendments, offer a favorable legal framework for multinational companies to establish their regional headquarters. These companies, known as SEMs (Headquarters of Multinational Enterprises) and EMMAs (Multinational Enterprises for the Provision of Services Related to Manufacturing), benefit from a reduced tax rate on income generated in the country and do not require a Notice of Operation.
The Ministry of Trade and Industry has developed programs to centralize the management of licenses, visa processing, and benefits for foreign employees, simplifying the entry of foreign capital. In addition, Law No. 76 of 2009, as amended by Law No. 25 of 2017, promotes the competitive development of the industrial and agro-industrial sector, including micro, small, medium, and large manufacturing and processing companies.
These policies, combined with the growing demand for healthcare services in the region, make Panama an attractive destination for investment in specialty hospitals, pharmaceutical research centers, the development of healthtech solutions, and medical product manufacturing.
In conclusion, investment in health is not only a matter of well-being, but a smart strategy for sustainable economic growth in Latin America and the Caribbean. At the same time, governments in Latin America and the Caribbean urgently need to strengthen their health systems, which implies not only a substantial increase in budget allocations for the sector, but also the implementation of profound structural reforms. According to experts, these reforms should focus on improving operational efficiency, optimizing resource management, and, fundamentally, raising the quality and accessibility of healthcare for all citizens. Investment in infrastructure, medical technology, healthcare personnel training, and public health programs is crucial to addressing the region's current and future challenges.
For investors and companies, this situation represents an unprecedented strategic opportunity. The growing interest in health, driven by greater social awareness and the need for resilience in the face of health crises, makes this sector an attractive investment focus. The opportunity lies not only in contributing to social development and the well-being of populations, but also in the possibility of obtaining significant economic returns in a market characterized by its expansion and long-term growth potential. Investing in healthcare, healthtech, and the pharmaceutical industry in Latin America and the Caribbean is not only a matter of social responsibility, but also a smart decision from a business perspective.
As opportunities in the healthcare sector continue to evolve, it is crucial that stakeholders stay informed and adapt to changing market dynamics.
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